Question

Assuming that a customer has the ability to pay, revenue from a sporting event is recognized by the event promoter (the party responsible for all event business elements such as selling tickets, promoting the event, securing the venue, etc.) when:________a. A waiting list for the sporting event’s tickets has been formedb. When the cash from selling the tickets is collectedc. The tickets to the sporting event are soldd. The sporting event takes placee. All of the listed answers

Answer 1

Answer: The sporting event takes place.

Explanation:

By the Revenue Recognition principle of Accrual based accounting, revenue is only to be recognized when it is earned. In other words, it should only be recognized if the service or good that was paid for has been delivered.

In the above scenario, the service to be delivered is the sporting event. As such, the event promoter should only recognize the revenue when the sporting event is delivered by taking place if they are going by the Revenue recognition principle which is a principle recognized by both U.S. GAAP and IFRS.